Mongolia
to establish free economic zone on China-Mongolia border area

Xin-hua News

Beijing

November 16, 2004

Mongolia
will establish a free economic zone in border areas with China.
It will exempt income taxes for foreign companies to boost trade
and economic cooperation with its southern neighbor.

L. Amarsanaa, Mongolia's ambassador to China, made the remarks
when briefing Chinese companies on the investment conditions of
Mongolia in a meeting held in the Mongolian embassy here on
November 15.

D. Galsandorj, director general of the Trade Policy and
Cooperation Department of Mongolia said the free economic zone
will be located near Erenhot in north China's Inner Mongolia
Autonomous Region, and will cover an area of about nine hundred
hectares. The bid for building the infrastructure of the zone is
finished, he said.

The free economic zone will be separated into three parts, for
trading companies, processing companies and tourism companies,
he said.

To attract foreign investment, the Mongolian government will
exempt income taxes for foreign companies that invest in such
fields as electricity generating, road building, oil
exploitation and processing, and chemical industry in the first
five to ten years, he said, adding that the government will also
reduce necessary licenses and set up "one-stop" service centers
to reduce the time for customs procedures to three days.

An employee of the Shenhua Group Corp. Ltd., which plans to
invest in Mongolia, said Mongolia's abundant coking coal
resources are complementary with China's coal resources and are
very attractive.

Hu Bin, vice chairman of the China Shougang International Trade
and Engineering Corp. said they are considering cooperating with
Mongolia in iron mining because of its comparatively high grade,
short transportation distance and good investment policy.

Trade between China and Mongolia in 2003 amounted to 4.6 billion
US dollars, about 33.4 percent of the total volume of Mongolia.
China is also one of the biggest investors in Mongolia, with
more than 1, 300 Chinese companies of over 4 billion US dollars
investing in fields such as textile, service, trading, and
mining. Investments in such areas as mining and infrastructure
construction increased sharply in recent years.